RECOVERY BECKONS IN 2022

It will be a recovery year for the Philippine real estate industry next year.

Real estate is sensitive to economic growth and the Philippines is projected by Goldman Sachs to register next year the fastest gross domestic product (GDP) growth among the Asean 5 at 7.3 percent.

In the office space market, the financial resiliency of landlords has been observed the past two years as seen in the absence of an asset sale significant enough to be noticed by the industry. The decrease in rent has been within range as well, despite the double-digit vacancy rates in the major central business districts in the National Capital Region. We always tell landlords that weak demand should be considered as a temporary issue. On the ground, we are already seeing significant movements from the tenant side, but most are looking at closing their deals during the first half of 2022. Still, at Lobien Realty Group, we see that it will be a tenant-driven market for the next two to three years.

On the tenant side, we advise them to start hunting for their office space as early as now in preparation for this expected recovery.

Commercial spaces are expected to also pick up, while last to recover will be the hotel in

dustry given the continuing restrictions and low traveler confidence.

Meanwhile, the housing and warehousing markets were the bright spots during the pandemic.

Despite the economic challenges, demand was also robust in the housing market, where we saw prices holding their ground and even increasing in the high single digits. The warehousing industry, expectedly, was propped up by the six-fold increase in online sales for the past five years.

Growth drivers

The main driver of the recovery will be our ability to control the COVID-19 situation, which will rely heavily on our vaccination speed.

We currently no longer have vaccine supply issues, so we just need to vaccinate as quickly as possible. Of course, the government’s monetary and fiscal policies should continue—which shall include lower interest rates and infrastructure spending.

Hopefully, the upward trend in remittances of overseas Filipino workers (OFWs), higher employment rate, lower inflation, and the expected higher government and consumer spending will allow the economy to recover.

For the headwinds, we are seeing a resurgence of COVID-19 in other countries and we hope that we do not experience the same here in the Philippines. Vaccination and boosters should be aggressively pushed.

Pandemic-proof investments

We have seen that demand for higher-end condos, single detached homes and residences situated in townships grew during the pandemic.

The common denominator is that homebuyers and investors want to pandemic-proof their residential investments: bigger is better for the family’s manifold purposes such of working from home and online schooling, while a township setup ensured easy transport to their offices, groceries, drugstores as well as lower exposure to COVID-19 during the commute.

The value of farm lots and beachside homes—in terms of health, mental and social factors—has been magnified by the pandemic.

If ever there will be a return to prepandemic preferences, it will take a long time—probably at least a decade. The shock value of the pandemic will remain with all of us for a long time and will greatly impact our real estate decisions in the next several years.

The main driver of the recovery will be our ability to control the COVID-19 situation, which will rely heavily on our vaccination speed

Sheila Lobien